Tustin man guilty of stealing from public contracts

A Tustin man was convicted Friday of pocketing more than $350,000 from public-works contracts in local cities by underpaying his workers.

Reza Mohammedi, 58, pleaded guilty to 15 counts of failing to file a return to evade tax, 15 counts of willful failure to pay tax, seven counts of taking a portion of a worker's wage on public work, six counts of recording false and forged instruments and three counts of filing false tax returns, prosecutors said. He was sentenced to two years in state prison, and a restitution hearing is scheduled for Nov. 29.

This is the first prosecution in Orange County for fraud related to public works contracts, according to the Orange County District Attorney's Office.

According to prosecutors, Mohammedi's company, Southland Construction, hired mostly undocumented workers for public works contracts in Brea, Fullerton, Orange and Laguna Woods, as well as the county, the Saddleback Valley Unified School District and the Orange County Transportation Authority.

Over the course of several years, Mohammedi paid workers $13 an hour instead of the $42 to $53 an hour required of contractors under California labor law, prosecutors said. He pocketed the difference, and hid the embezzlement by filing false reports and threatening to call authorities on his undocumented workers if they reported his crime, prosecutors said.

To hide the fraud, prosecutors said Mohammedi would give workers checks with the correct wage, then required them to return most of their pay in cash or by paying for project materials, prosecutors said.

California law also requires employers to file payroll reports quarterly with the Employment Development Department. He filed two false reports, prosecutors said, and also claimed tax deductions for the wages he did not pay.